Following Gov. Gavin Newsom’s presentation of the May Budget Revision, CEO & Executive Director Vernon M Billy and CSBA’s Governmental Relations team joined Michael Fine, CEO of the Fiscal Crisis and Management Assistance Team; Dr. Daryl Camp, superintendent, San Lorenzo Unified School District; and Brett McFadden, superintendent, Nevada Joint Union High School District to provide analysis and local perspective on the proposal.
Billy opened the “May Budget Revision Update: Implications for Schools” webinar by critiquing the major thematic elements of the Governor’s revised proposal. “This year’s May Revise contains more bright and shiny budget proposals than any in recent memory, and yet, at the same time, many of our underlying, structural funding issues still remain,” Billy said. “Gov. Newsom’s proposal is extremely generous … and is ambitious in terms of the new programs … which are well-intentioned and in areas of great need, and the Governor should be commended. At the same time, we are concerned about the creation of new programs with one-time funding that should be used for things like paying off deferrals.”
While the level of Proposition 98 funding is appreciated, many proposed funds are one-time money for categorical programs that would need ongoing funding. The May Revise also fails to repay the June apportionment deferral — in fact, increasing it from $2.3 billion to $2.6 billion — and uses that money to fund new programs, many of which only provide funding to schools that receive Local Control Funding Formula concentration grant funding.
CSBA Assistant Executive Director of Governmental Relations Dennis Meyers provided an overview of the May Revise, noting CSBA’s areas of concern that “set an agenda for advocacy over the next few weeks.”
Gains in COLA and losses in other areas
The May Revise contains an increase to the compound cost-of-living adjustment (COLA) for 2021–22 and 2022–23 by 1.7 percent from the January proposal to 5.07 percent. In addition, the special education COLA will increase by more than 2.5 percentage points. “This is huge for special education,” said CSBA Legislative Advocate Erika Hoffman. “It takes special education COLA from 1.5 percent in January to 4.05 percent, and this gets to be part of your permanent funding for special education — this is wonderful news.”
Issues of concern in addition to the administration’s decision to keep the June apportionment deferral include the state’s backtracking on its “promise,” known as the supplemental payment, to increase the state General Fund contribution to the Prop 98 guarantee over the next few years to bring the Test 1 amount up to 40 percent (from the current 38 percent). The Governor’s January Budget included a repeal of all but the first-year supplemental payment of $2.3 billion, and the May Revise pulls back the $2.3 billion supplemental payment, reportedly in favor of re-benching the guarantee for transitional kindergarten expansion. “The state is completely rolling back what it promised, which is to get to 40 percent of the General Fund,” said Meyers.
A return to categorical programs causes concern
CSBA legislative advocates reviewed the many categorial proposals including the expansion of transitional kindergarten, increases in LCFF concentration grant funding for expanded learning opportunities, teacher pipeline and professional development programs, and community schools and wraparound services. When reviewing the $3.3 billion proposed for teacher-related programs, Legislative Advocate Cheryl Ide pointed out other uses for these funds. “This is all one-time funding,” Ide said. “The difference between this and what was proposed in the January budget is enough to pay off the June deferral.”
Nevada Joint Union HSD Superintendent McFadden said he feels like the proposal represents a missed opportunity to address more structural issues in the K-12 system. “While I want to congratulate the Governor and his administration for looking at various social-emotional, equity and academic barriers to learning for our students, and if you look at each of these areas in a silo, they are critical public policy issues,” McFadden said. “However, we as a whole continue to be challenged by a woefully underfunded system … You’ve heard some of the unresolved issues today about pensions, declining enrollment, any host of other issues that we need to address. When you look at this proposal, you see the bulk of the new funding is being obligated to a set of new categorical programs. So, a fundamental question is: what happened to local control?”
Approaching the 2021–22 budget
FCMAT CEO Michael Fine offered some practical considerations and tips for boards and LEA staff currently working on their 2021–22 budgets. He noted that many of the concerns raised in the webinar relate to the fiscal stability of local educational agencies. He told the audience to consider the cautions offered during budget revisions, since initial budget drafts will not include many of the new programs announced on May 14, as they are still proposals.
“We have a very large amount of one-time funds in this proposal, especially when you consider that we are already dealing with a large amount of one-time state and federal funds due to COVID-19 recovery, Fine said. “I encourage you as trustees to ask your staff to, as they bring the budget proposal forward, that one of the most important pieces is a multiyear financial plan for a minimum of three years. It is during that time period that many of the one-time programs will cease to exist.”
Fine recommended two versions of the multiyear financial plan: one that is reflective of all the current conditions including the one-time resources, which would be the one the board adopts; and another version that takes the one-time funding out of the budget. “All these one-time resources and one-time proposals will mask what is truly going on in the structural, foundational issues of your revenue and expenditure budget,” he said. “You need to pay attention to the long term.”